You may have heard a lot on the news about President Biden’s tax plan. Are you worried about how it will affect you and your tax situation?
In this episode of Financial Symmetry, Grayson Blazek helps to demystify Biden’s tax proposal.
You’ll learn how you may be affected and whether or not you should be worried. Don’t wait until April 15 to start your tax planning! Press play to learn what you can expect next year.
When does the new tax law take effect?
Even though you may have heard plenty about Biden’s tax plan, it still isn’t the law–yet. As of May 2021, there has been no bill signed. This much-discussed tax plan still needs to make its way through Congress. There may be changes that take place in the way the plan is structured as part of the negotiation process. Although it hasn’t passed yet, it is still a good idea to learn as much as you can about the proposed tax law so that you can get a jump start on your future tax planning.
Who benefits from the proposed tax law?
If your annual income level is at or below $400,000 there are many tax planning opportunities that come with the proposed tax law. The most notable change to the current tax plan is in the child tax credit. This tax credit will rise from $2000 per child to $3000. Additionally, for children under the age of 5, the child tax credit will be even higher–$3600. You may even see your tax credit hit your account early starting in July of 2021. Learn what you should be watching out for as Grayson Blazek explains how the new child tax credit will work.
How will this tax plan affect your retirement accounts?
The proposed tax law could turn retirement planning on its head. Many people use a 401K as their preferred retirement savings vehicle, but with the new proposal, the tax benefits of the 401K may no longer be as attractive for high-income earners. The Roth IRA could become the preferred avenue. When the new tax plan takes effect you may want to change your retirement contribution strategy. Press play to learn why.
Don’t let the tax tail wag the investment dog!
Even though it is important to plan ahead when it comes to taxes, you don’t want the tax tail to wag the dog. This means that you don’t want your tax planning to decide everything about your financial planning. Taxes are a big part of financial planning, but it is also important to note that they are simply an inevitable side effect of making money. Now that you know a bit more about the future of tax laws you can begin to think forward to next year and beyond to structure any big liquidation events and consider where you stand financially.
Outline of This Episode
- [2:33] Don’t be in a rush to make any changes to your tax planning–yet
- [7:34] Some benefits of the new tax laws
- [12:35] What to look out for if you make between $400,000-$1M
- [17:45] Retirement account tax planning could change completely
- [23:48] Estate planning considerations
- [28:08] Today’s progress principle
Resources & People Mentioned
- Biden’s Tax Plan Calculator
- Schitt’s Creek
- Checklist – How Might Biden’s Tax Plan Affect Me?
- Checklist – As a High-Income Taxpayer, How Might Biden’s Tax Plan Affect Me?
Connect With Chad and Mike
- Connect on Twitter @csmithraleigh @TeamFSINC
- Follow Financial Symmetry on Facebook